Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

() (): I present the report of the Economics References Committee Out of reach? The Australian housing affordability challengeand move:

That the Senate take note of the report.

I am very pleased to speak to the tabling of the committee's report entitled Out of reach? The Australian housing affordability challenge. This is an important report, which documents the current state of affordability of housing in both the home ownership and rental-housing markets in our country.

The majority report finds, based on the evidence, that a significant number of Australians are not enjoying the security and comfort of affordable and appropriate housing and that, currently, Australia's housing market is not meeting the needs of all Australians.

We know that people who experience poor housing affordability are put at a higher risk of experiencing poor outcomes throughout their life. Poor housing affordability damages economic productivity, employment opportunities and increases risks to the stability of the financial system.

Families in housing stress struggle with their family budget, keeping food on the table, keeping their children engaged at school and maintaining their employment. So with this background the majority report calls for national leadership when it comes to housing and homelessness policy and programs. To achieve national leadership this government must change its approach. Firstly, there must be a minister for housing and homelessness. Witness after witness coming before our committee bemoaned the lack of a housing minister and the lack of engagement on housing policy by this government. Further, many argued that the minister responsible for housing needs to have an economic focus rather than just a welfare-based approach—that is, to be a housing minister, not a housing welfare minister.

Secondly, national leadership requires serious engagement with both local government and the states and territories—engagement that is not happening at present. This government has abolished the institutional architecture that facilitated good, cross-government planning and negotiation on service delivery. The National Housing Supply Council—gone! The COAG Select Council on Housing and Homelessness has also gone. The Prime Ministers Council on Homelessness has also gone. Gone are the governance structures that could and should exist to work across the complexity of intergovernmental responsibilities that naturally exist in housing policy. Access to safe, secure and affordable housing affects every Australian, and, as such, all levels of government need to be engaged.

Thirdly, the committee consistently heard that we need a national affordable housing plan. We heard this from right across the sector: from academics and researchers; from housing peak bodies like National Shelter, the Community Housing Federation of Australia and Homelessness Australia; from ACOSS; and from local governments, but also from the development sector—from the UDIA and MBA, to name just two. The City Futures Research Centre's submission detailed the attributes of a good national plan, and I commend their submission to the Senate; we quoted from it extensively in the report. The report also says:

In the committee's view, the Australian Government should be the driving force behind the development and implementation of—

such a plan.

So it was with significant disappointment that we saw that the government senators' dissenting report has reverted to the tired lines that we have heard from Liberal governments for a very long time. Over and over, they responded to the report's recommendations with: 'Not supported—is a matter for state and territory governments,' or, 'Not supported—is a state and territory issue,' or, 'Not supported—inconsistent with government's red tape reduction agenda.'

Mr Acting Deputy President Edwards, you know that government senators attended these hearings. They read the submissions. They heard, as did we, the calls for bi- and multipartisanship; of the need for certainty in land use and infrastructure planning and in decisions about population policy and taxation policy. They heard, as did we, that decisions taken by one government—or, indeed, even one part of a government—can and do impact housing affordability, albeit mostly unintentionally. So that is why Labor senators were keen to find areas of agreement, to reach the bipartisanship that was called for. It is disappointing, to say the least, that that was not achieved—or, in fact, even attempted.

Our majority report canvasses state and local government taxes, fees and charges, and zoning, planning and development approval processes, and recommends, in part, that the state and territory governments phase out conveyancing stamp duties, and notes that the ACT's recent stamp duty reforms provide a template or a starting point for others to consider. The committee heard from many submitters about the need for the Australian government to engage in decision making about our major cities, about urban regeneration and the use of transport corridors, about timely and coordinated infrastructure delivery, and so that is why the committee has recommended the re-establishment of the Urban Policy Forum.

Many witnesses and submitters discussed the effects of negative gearing and capital gains tax on affordability. In order to encourage an informed public debate on these contested issues, the committee recommends that if these issues are not addressed in the government's tax white paper then Treasury should prepare and publish a study on the influence of negative gearing and CGT on affordability of housing. It was disappointing that Treasury was unable to quantify the effect of the negative gearing arrangements on housing prices or rental affordability.

Time does not allow a full discussion of all of the considerations and the 40 recommendations of the committee, but that does not diminish their importance. I do, however, want to highlight one further issue.

In December last year, the government terminated the Housing and Homelessness Program in the Department of Social Services from June 2015. This resulted in the withdrawal of funding to National Shelter, to the Community Housing Federation of Australia and to Homelessness Australia, and a change to the funding arrangements for the Australian Housing and Urban Research Institute, AHURI. I want to record my concern about the evidence from the department that was vague about the reasons that decision was taken. One can only come to the conclusion that the decision taken was a political one.

Finally, I want to place on record Labor senators' thanks to all 231 organisations and individuals who submitted to this important inquiry. I thank those who presented evidence to the hearings, including witnesses who provided extra material for our consideration. I thank the Parliamentary Library staff who undertook some research at my request. And, most importantly, I want to thank the secretariat of the Senate Economics References Committee, Dr Kathleen Dermody, Dr Sean Turner, Ms Morana Kavgic and Ms Ashlee Hill, for their professionalism, for their patience and for their good humour.

I conclude by quoting from the press release from the UDIA that was released on Monday welcoming the tabling of this report. Mr Michael Corcoran says:

The Senate Inquiry into Affordable Housing report makes a valuable contribution to the national discussion on housing affordability …

And he concludes by saying:

We now well and truly know what the problems are; it's high time all levels of government engage with industry to identify and take the necessary actions to solve the increasing lack of affordable housing.

I commend this report to the Senate. I commend the report to the government. And I encourage this government to start to engage with housing and homelessness policy, for the good of all Australians.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Thank you, Senator McLucas. Senator Ludlam.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Thanks very much, Mr Acting Deputy President Edwards, and I also acknowledge that you, on behalf of the coalition, played a role in this inquiry that actually traversed, I think, every state and lasted for more than a year. I would like to put on the record, on behalf of the Australian Greens, my thanks to the secretary and staff—particularly to Dr Turner and Dr Kathleen Dermody, and the secretarial staff, without whom we simply cannot do this kind of work.

There are a couple of witnesses who I would also like to specifically acknowledge. Can you imagine being called before a Senate inquiry into an issue that affects as many people as housing affordability does, just after you had had your funding cut, and asked to provide the kind of essential advice and advocacy that you had been doing on a shoestring of a budget. So I particularly acknowledge Carol Croce and Eddy Bourke from the Community Housing Federation of Australia, Adrian Pisarski and all those at National Shelter, and Glenda and her wonderful staff at Homelessness Australia. These are the most eminent experts and compassionate problem-solvers in the country in their field, and they were giving us evidence on what the consequences would be, as Senator McLucas identified in her contribution, of axing their funding. Mr Hockey, having introduced his task force after fobbing the entire country off for more than a year on this inquiry that the federal government was meant to be undertaking, has then shoved it under the rug of the tax white paper and the reform of the Federation. It is as though nobody is going to lift a finger to help people who are homeless or who are suffering skyrocketing rents and basically a generation that has given up on ever being able to own their own home unless we sell a century's worth of disputes over the function and form of the Federation. We had what I thought were constructive contributions from everybody, including coalition senators. While collectively we bring very different perspectives to bear, at least the quality of debate and questions that were put to witnesses were very high. It was extremely disappointing to then see the government minority report effectively dismissing out of hand three-quarters of the recommendations on the basis that it is red tape. If you are so keen on operating the Commonwealth of Australia as though it is a corporation—effectively just sacking people and abolishing things—then go back to the private sector. Government is actually necessary for some things, and it would be very cold comfort for those homeless people in our community who are forced to go through another winter with nothing on the table.

Again, my acknowledgement and thanks go to those witnesses who, despite hearing the fact that they were going to need to wind up those entities I mentioned before, nonetheless had the grace to come and give us the benefit of their advice. We heard from a wide range of experts and practitioners, whether it be academics, advocates or those in the private sector or non-profit organisations, whose job it is to try and provide affordable housing. But a couple in particular came to mind in the West Australian hearing that we conducted. A number of people who are currently experiencing homelessness came and gave evidence to the inquiry for the first time. It was immensely moving, and it is good to see that some of the recommendations that they put forward have been taken up and, I believe, agreed to unanimously. What extraordinary courage and dignity Jonathan Shapiro, Owen, Bevan and Mort brought to the table to tell a bunch of senators and staff, who all had homes to go to after the conclusion of the inquiry, what it is like to actually suffer and experience homelessness. The description they gave is that once you fall off the bottom of the ladder, you suddenly realise that a bunch of the bottom rungs are missing. That is why it is so important that the Commonwealth steps up and accepts its responsibility.

The housing department in my home state of Western Australia has a decent reputation nationally for embedding good programs for homelessness in particular. They have just opened the new Foyer centre in Leederville, which effectively provides a way of getting people who are at risk of homelessness or are actually suffering it, particularly young people, and putting them into a safe environment with a roof over their head and a stable place to live. They then wrap services around them, including job training support and the kind of assistance that people need when they are suffering homelessness. It is devastating to hear from these people directly and realise that the single most important reason why many of them are on the streets is that their homes are not safe; that they are suffering domestic violence or intimate partner violence. It is not good enough for the government to then step back and say: 'No, we are in the business of reducing red tape.' That is one of the reasons why the bottom rungs on the ladder are missing. So thanks go to those individuals who gave evidence, and also a shout out to Nick—good on you for looking after your dad. These people have brought extraordinary dignity to the task, and it is absolutely up to us in this place to listen to them and then to carry out some of the things that they have proposed to us.

What really strikes me is that we have had report after report not just out of this place, but across the affordable housing sector for years, describing the meltdown in the Australian housing market—that there is a crisis. It is something beyond crisis—it is the largest single component of the cost of living, and yet the government seems to pretend that it is really not the Commonwealth's problem, and that the states and territories can fix it up. But they simply do not have a broad enough tax base to do so. That is why we have made some recommendations that go to things like stamp duty and reform of the states' perilously narrow tax base. This is a report that contains answers though, of course, we could not get agreement on everything. We have also submitted some additional comments that propose, for example, that the Commonwealth develop an interest in mandatory standards for affordable housing in particular areas—inclusion rezoning, as it is known. That is something that we believe is essential, and should not have been left out of the majority report.

Similarly, on some of the comments that Senator McLucas made about tax, we have to finally confront the elephant in the room. I think it is quite positive that Mr Bowen, on behalf of the opposition, has indeed taken a tentative entree into the debate on behalf of the Australian Labor Party on those tax measures that tilt the housing market in favour of investors and substantially and systematically disadvantage first home buyers. There is no question at all that first home buyers are being priced out of the market by housing investors who are supported by incredibly generous tax breaks, including negative gearing and capital gains tax exemptions.

They should not be controversial. Mr Hockey, without even contemplating it, did not ask Treasury to do any modelling. Treasury told us they did not know what these tax breaks cost the taxpayer. However, we are fortunate that others and independent analysts have developed some models, and collectively it costs taxpayers billions of dollars. Recommendations that were supported by the coalition senators, and these are the areas that we would look forward to working with you in the brief time you have left in government, include things like the regeneration of urban corridors—that is, rather than considering that new housing supply always has to be on the fringe, and that the only affordable housing that we can provide for people needs to be dozens of kilometres away from jobs and schools and public transport. I am delighted that the coalition senators supported that recommendation. Housing supply bonds was another; supporting the possibility of a specialised instrument to get institutional investors into the affordable housing space. We think that that is an extremely productive idea, and a lot of work has been done on that. There are a number of other recommendations the coalition senators supported. We are very disappointed that you did not come and join the majority report, but I thank you on behalf of the Australian Greens for at least identifying the areas where you are amenable to working with the crossbenches and the opposition.

The reason why I point out that it is absolutely essential that we deal with the elephant in the room, which is the tax concessions, is simply, I think, a very powerful set of arguments around inequality in Australia: the fact that the top 20 per cent of people have five times more income than the bottom 20 per cent and we have an income tax system that is designed to offset that. We have a progressive income tax system to deal with that fivefold imbalance between the top 20 per cent of Australians and the bottom 20 per cent. But the fact is the top 20 per cent hold 71 times more wealth, and that is because wealth is so generously concessionally dealt with under our tax system that we are taking human shelter, which is a human right, and converting it into just another asset class, and that is what is manifest in this extraordinary concentration of wealth in the Australian community. I do not think it is part of the Australian culture to do so, and it is something that we think, on budget night in particular, there could have been some good news about for people suffering skyrocketing rents and people who have just about given up on buying their own home and, most significantly, people tonight who have nowhere to go. Those are the people that we will be letting down tonight if we refuse to take on these issues head-on, and the Greens are ready to negotiate with anybody in that regard.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

It is a great honour to rise to speak tonight about this report that I had some time on as a committee member. I also want to recognise your efforts, Mr Acting Deputy President, as the Deputy Chair on this inquiry. I also would like to pay tribute to the secretariat staff and Dr Kathleen Dermody and Dr Sean Turner. They do stellar work under immense pressure at the moment. To get a report out of this quality and scope in the time available is a great credit to them.

I do want to start, though, by correcting what I believe are a few mischaracterisations from the previous speaker, Senator Ludlam. I think if, perhaps, the people listening tonight just took away his speech they would come away with the impression that the government has referred issues of homelessness and people living on the streets to a taxation white paper. That is exactly not the case. It is precisely not the case, because, as the good senator would know, through you, Mr Acting Deputy President, on 23 March this year the government announced that it would extend the National Partnership Agreement on Homelessness for two years. In previous budgets it has only been extended for one year, including in the last budget of the former Labor government. But we have made the decision, we have listened to the sector and we have extended that for two years to give them certainty for that period and funded it to the extent of $230 million to be matched by state and territory governments. So it is absolutely not true that the government is not taking action on homelessness.

It is true that the broader issues about land supply and the correct planning of cities, as the senator raised, are very important issues that we do think need to be resolved through a federation process, and I will tell you why I especially have that view, and I think coalition senators in this report have that view. I believe we did have an approach under the Rudd government, in particular, of trying to do things unilaterally in this space, of trying to have the Commonwealth government step in with a major cities reform unit, with a National Rental Affordability Scheme. The approach that the Commonwealth knows best, we will come in and fix the problems of affordable housing and planning in cities was an absolute disaster. The problems with that rental affordability scheme are well catalogued. It was not particularly well targeted. It just shows the error of thinking that we, here in Canberra, know best and know how to tell states and territories how to do their job. If we were to repeat those mistakes, if we were to repeat history, we would only repeat the errors of that government, we would only lead to more fragmentation in this sector. We would not solve the underlying problem, which is to do this in a coordinated way, and that has to happen through a COAG process and/or through the broader reform of the federation.

I want spend the rest of my time in this contribution focusing on this issue of negative gearing because it is the one that I think is most important here. I think we can make it very clear that on this side of the chamber we do not stand for increased taxes. We want to promote investment in our community. We do not want to foreshadow making changes to longstanding taxation arrangements that would create fear and uncertainty for investors in this country, because we have had negative gearing for decades. We have had a tax assessment act since the 1930s that has allowed legitimate deductions for business investment in this country. That framework that allows for legitimate deductions against income—you earn income from an investment, you are allowed to deduct the costs of earning that income—has been in place since we had income tax in this country. To say that that system is somehow responsible for the increase in prices we have seen in the last 10 to 15 years and the consequent reduction in affordability is just nonsense. It is total nonsense. It does not stack up with the data. We have had negative gearing for much longer than that period, so somebody needs to explain how, suddenly, the investors in this country woke up, apparently 10 or 15 years ago, and said: 'Well, because we have negative gearing—we didn't realise it for decades before—but now we're gonna bid more at auctions and all those things.' It just does not stack up. That is wrong.

Another thing that I think Senator Ludlam got wrong was that somehow there is some problem with tax deductions flowing to high-income earners or people with high wealth. We have a progressive tax system. I support a progressive tax system. The very fact we have a progressive tax system is going to mean that people—

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

For income.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Yes, for income, Senator Ludlam! So, if you are going to have deductions from income, where are those deductions going to flow to? Where are their values going to flow to most greatly? It is going to flow to those people that are taxed more greatly. Who is taxed more greatly in this country? High-income earners. That is who is taxed more, so they are going to get more deductions. Of course they are going to. That is how the system works. If the Greens have a different proposal, if they do not want to have a progressive income tax system, if they want a flat income tax system, fine, let's put that on the table. But that is not the system we have.

I also want to finish by saying that I have never seen a workable proposal to change this system. There are proposals going around at the moment that we could somehow quarantine negative gearing to new houses or to new investors. But how does that work? If I build a house and land package now and I get the deduction because this is a new house, then in a year or two's time I want to sell that house to some other person, do they lose the negative gearing? Do they lose the tax deductions? That will never happen. People look forward when they are investing and, because of that, that will affect their investment decisions now, and I, on this side of the chamber, stand for investors in this nation. I think that people who want to invest in our housing, invest in businesses, invest in their future should be supported and should not be denigrated by our parliament, because it is only through that investment in capital that we are going to get the economic growth and returns that will continue to make this a very prosperous country that can provide generous benefits, particularly to those who are homeless.

Debate adjourned.